Survey: Americans Prefer Portugal, Costa Rica & Mexico for Overseas Real Estate Investment

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Survey of International Living Readers Also Shows Preference for Beach, City Properties, Good Healthcare, Safety

By Ronan McMahon

Cabo San Lucas, Mexico – Ronan McMahon’s Real Estate Trend Alert, a leading source of real-time information for investors on off-market, insider real estate deals in up-and-coming locales, today released the results of a survey that ran in late October with 434 readers of International Living responding. Both people who are professionally active and retirees were surveyed. Portugal is the preferred destination, in second and third place are Costa Rica and Mexico respectively. When deciding to invest in a property, quality of healthcare and safety and crime rates are among the most important criteria investors consider.

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Investing in property abroad is no longer an option that is only available to affluent investors, but has gradually become more and more popular with middle class families in the last decade. Through the survey that was conducted with the readers of International Living, Real Estate Trend Alert set out to understand the preferences of American investors in terms of where they want to invest, how much they want to invest, and what they are looking to achieve with their investments.

Investments

The first question pertained to the amount people are planning to invest.

What is the total amount of investment(s) you are planning to make?

A large majority (79.54%) of respondents plan to invest less than $500,000. 38.14% even plan to invest less than 250,000. The numbers look very similar across retired and employed respondents. While at first sight, one might consider the investment amounts modest, it is important to take into account that in many foreign countries the price of real estate is considerably lower than it is in the United States. In Mexico, for example, it is possible to acquire a luxury condo in a five star beach and golf resort for $250,000.

Objectives

Respondents were also asked about the objectives they seek to realize with their investment(s).

What are your primary objectives with your planned purchase(s)? (Ranked)

The number one reason Americans invest in property abroad is that they want to relocate. In second place comes the search for temporary residence and in third place follows the search for a property that can be rented out. With only a few exceptions, the way respondents ranked their objectives are the same for people who are retired versus people who are employed.

Countries

Respondents were also asked where they plan to purchase real estate.

In what countries are you considering purchasing properties? [Top 5]

Portugal came out as the clear winner here, followed by Costa Rica. Mexico, Panama and Spain complete the top five (but the order in which they do so is different for retired Americans versus Americans who are employed).

Types of areas

Investors were also asked in what type of areas they would like to invest.

In what type of area(s) are you considering purchasing properties?

Beach property is the number one category of property purchased by Americans abroad. The city and suburbs follow in second and third place respectively.

Criteria for choosing a country

Finally, respondents were asked what criteria matter most to them when selecting a place to invest. For every country of the top five most popular countries, the three most important criteria were listed for the people who selected that specific country.

View on what people consider important when buying property abroad who selected one of the top five countries.

Safety and crime rates and quality of healthcare are predominantly present in the top three criteria for people who considered any of the top five countries to invest in. Both Costa Rica and Mexico have market conditions (perceived potential for appreciation) in their top three. For people who selected Panama, quality of governance was (on third place) an important factor to consider and Americans who want to invest in Spain attach (on third place) great importance to cultural affinity with the place.

“Americans want to feel safe.”

“The picture we got from the survey is very clear. Americans want to live close to the beach in a country where there is plenty of sun. They also want to feel safe and have high-quality healthcare,” said Ronan McMahon, founder and editor of Real Estate Trend Alert, who’s been a part of more than $2 billion in international real estate transactions over the past two decades.

“When Americans look to invest in property abroad, they do so for many different reasons with relocation being the most important one. People want to move to Portugal, Costa Rica and Mexico first and foremost. Panama takes the third place with retired Americans. When we look at the budgets that people have available to spend on property abroad, with a large majority not planning to spend more than $500,000, it is no surprise that we see Central American countries so prominently represented in the top three most favored countries.”

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MEET RONAN MCMAHON
AND REAL ESTATE TREND ALERT

Ronan McMahon’s Real Estate Trend Alert (RETA) is a real estate investment newsletter founded in 2008 by international real estate investor and author Ronan McMahon. It’s sourced and written by Ronan and his team of real estate experts who search the globe with boots on the ground for six-months out of the year looking for the best real estate deals. Since its inception, RETA has helped thousands of individual investors access off-market, insider deals in up-and-coming locales the world over. More info at www.ronanmcmahon.com.

Media Contact
Ray Young
Razor Sharp PR
512.694.6097
[email protected]

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New Book: How to Profit from International Real Estate Investing

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‘…While some housing markets are crashing, others will likely be booming’

Cabo San Lucas, Mexico – After more than 25 years of investing in global real estate markets in seven countries on three continents, including Panama, Portugal, Mexico and Brazil, Ronan McMahon, founder of Real Estate Trend Alert, is sharing the best secrets for success that he’s learned by taking part in well over $2 billion in real estate transactions. Written for ordinary people looking to make extraordinary moves, the new book is titled Ronan McMahon’s Big Book of Profitable Real Estate Investing and is published by International Living Publishing Ltd., a division of International Living, the leading source for the world’s best places to live, travel and retire since 1979.

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Based on decades of real world experience and know-how, this book is a practical guide to help aspiring real estate investors – and anyone looking to strategically purchase a home overseas – to understand the why, where, and how of international real estate.

“With soaring inflation and sky-high prices right now, the secrets of successful real estate investing can help regular people around the world secure their financial freedom,” said McMahon from Cabo San Lucas, Mexico. “This book holds every useful method, and sometimes little known insights, to make serious money from real estate. In more than 25 years of investing, probably the biggest thing I’ve learned is that it’s surprisingly simple to become a successful real estate investor.”

The Irish property bubble that lasted from 2000-2007 was the original catalyst that compelled McMahon to look overseas for better opportunities. Along the way, he had some interesting adventures. In Brazil, he almost died in a dune buggy crash, and in Panama he flew over the Panama Canal in a billionaire’s helicopter, all in search of the world’s best real estate investments. It was by traveling the globe he discovered that, while some housing markets are crashing, others will likely be booming.

“When you look everywhere there is always a big opportunity somewhere,” said McMahon, who also posts regular insights and opportunities at Real Estate Trend Alert. “That goes not just for real estate investing, but for living as well. That’s why I split my time between Portugal, my home base, winter in sunny locales like Los Cabos and the Caribbean, and summer in Europe, with trips to my home country, Ireland. I never have to face any cold weather, which is just my preference. Lots of people no doubt prefer chilly weather, but we should all have a choice.”

Packed with the most up-to-date information, the book operates as a how-to guide for anybody thinking about buying real estate overseas and how they can afford it. Some of the topics McMahon opines on include:

  • The top real estate investment trends to consider.
  • Where buyers can make double-digit rental yields this year (or any year).
  • The what and how of crisis investing.
  • Real estate investing pitfalls to avoid.
  • Navigating overseas markets without getting burned.
  • How to fund your overseas investment.

The book is now available on Amazon and from Real Estate Trend Alert.

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About Real Estate Trend Alert

Real Estate Trend Alert is a real estate investment newsletter founded and written by Ronan McMahon. Since 2008, Ronan has helped thousands of Real Estate Trend Alert members benefit from real estate opportunities all-over the world.

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Tokyo’s Urban to Suburban Migration

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Image from Pixabay

By Priti Donnelly

For years, Japan has tried to prevent its population from being overly concentrated in Tokyo, a city sprawling with nightlife, work life, and a tourist hotspot. Economic and social shifts of the pandemic developed into the start of a natural progression of migration out of the capital. Although the greater Tokyo area grew in 2021 by 26,323 for a gain of 0.07%, that figure was down roughly 110,000 from a year ago. In 2020 net migration by locals into Tokyo shrank by 27,000, or roughly one-third from previous years as people embraced telework and crowd distancing.

Initially, at the start of the pandemic, to avoid commuting, Japan adopted the work-from-home concept already popular in many parts of the world. As employers learned to adapt to matters of productivity and controlling hours of work, employees discovered the concept value in work and family balance plus the benefits of saving time from hours of commuting. Then, ongoing lockdowns turned flexibility into a lifestyle leading to the realization of the potential to settle outside urban centres. And, so began the urban to suburban or even rural movement.

Image from Pixabay

One Tokyoite, Kanamori sought to leave his luxurious life and job of the Roppongi Hills complex in Tokyo’s Minato ward for solace in the city of Yamagata. A place familiar to him as the place of business of his parents’ long established sake store. Initially he moved to Tokyo to attend university, then joined an IT company in 2017 selling computer tablets with an application that helped retail operators keep track of sales. But, after three years, the business took a couple of hits. First, the consumption tax was raised to 10% in October 2019. Then profits were hit harder after Covid. This, in addition to the long working hours and overtime deeply rooted in Japan’s industrial ethics. It is not unusual for employees to work more than 80 hours of overtime a month, according to a 2016 government survey and those extra hours are often unpaid. Kanamori’s lifestyle became all about work and he didn’t like who he was turning into.

Recognizing that those long work hours translated less into productivity and more into exhaustion, he left his job for a change in lifestyle and moved to Yamagata. There he became a member of the city’s community development team that aims to make better use of vacant homes, working four days a week, no overtime. On his days off, yes, he has days off, he goes camping with his friends. Peaceful living.

Image from Pixabay

Kanamori is not alone. The mountain resort town of Karuizawa in Nagano prefecture added 595 people via migration, the largest increase of any town. For the first time since July 2013, the number of people moving out of Tokyo outnumbered the number of people moving in by 1,069. In June 2020, inbound migration topped outbound migration once again, but from July 2020 through February 2021, more people moved out of Tokyo than people moved in and the trend has continued, with the exception of the months of March and April when more people generally move into Tokyo because of starting new jobs or enrolling at university, at the beginning or end of the fiscal year.  

Should I stay or should I go? Although Tokyo is attractive for its job opportunities, thriving business hub, and growth-focused initiatives for start-ups, people are discouraged by the high cost of living. The nationwide average monthly rent, not including utilities, for a one-room apartment (20 to 40 sqm) is between 50,000 and 70,000 yen. Rent for similarly sized apartments in central Tokyo and popular neighbourhoods nearby usually start from around 100,000 yen.

Image from Pixabay

But, the high cost of living is just one deterrent from permanent settlement. Where people once enjoyed the ease of fast food to satisfy the palate and the belly, they are now finding solace in places surrounded by greenery with access to fresh seafood, fruits and vegetables. For the sole purpose of slowing down to take care of oneself, the concept of growing and preparing foods for its freshness, nutritional value including low sodium and carbohydrates by comparison to fast-food, has been revived.

The attraction to the suburbs or rural areas is real, but it is hard to tell if it is more of a sabbatical, or a trend as we strive to stay safe. Either way, Tokyo is not entirely out of the picture. Even Kanamori still thinks he might return to Tokyo in the future for business opportunities. The city is after all a thriving international hub and continuously evolving for entrepreneurs to launch and be successful. As the old adage goes, “You can take the person out of Tokyo but you can’t take Tokyo out of the person.” But, this time on healthier terms.

Sources: The Japan Times, Nikkei Asia, Japan Guide

Priti Donnelly

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a Japanese proxy helping foreigners access the second largest real estate economy in the world. As a Canadian with a background in mortgages and marketing, Priti keeps foreigners informed of the latest trends, business news and featured properties in the Japanese real estate market. Her articles have been featured in REtalk Asia, REthink Tokyo, REI Wealth, and Asian Property Review.

International Real Estate Investors Renew their Interest in U.S. Properties

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Image from Pixabay

By Stephanie Mojica

One of the unfortunate consequences of the COVID-19 pandemic has been significant restrictions on foreign travelers entering the United States, which has caused the number of foreign real estate investors to decline. However, this trend is slowly changing as the U.S. government lifts travel restrictions.

According to CNBC, the main sources of foreign real estate transactions within the United States are Europe, Brazil, India, and China. Because the U.S. government relaxed travel restrictions for vaccinated travelers from 33 countries, people can now enter the country to buy real estate for the first time in almost two years.

Image from Pixabay

Wealthy people overseas have booked numerous appointments with American realtors, especially in cities such as Los Angeles, New York, and Miami, according to CNBC.

In 2018, foreign nationals purchased $267 billion in U.S. real estate; in 2019, they spent $183 billion, according to the National Association of Realtors. Stymied by the unavailability of in-person showings, foreigners bought only $107 billion of U.S. real estate in 2021.

During the pandemic, American housing prices have skyrocketed while the supply has dwindled — especially in common investment hubs such as Miami and Palm Beach, according to CNBC. Areas such as the Manhattan borough of New York City saw a decline in prices and an increase in supply, but this is changing as the pandemic seems to be drawing to a close.

Image from Pixabay

However, this may not pose a major problem to foreign investors. According to brokers interviewed by CNBC, buyers from countries such as China tend to prefer new construction. On the other hand, the United States real estate market might not see as much money from the hands of Chinese nationals. The government of China has created major blockages in its efforts to stop the flight of capital from its country.

The good news is that plenty of other countries and regions of the world do not have such restrictions, which will likely aid the U.S. real estate market as people continue to recover from the pandemic. Buyers from the Middle East, Canada, and Mexico are showing increased interest in investing in properties in the United States.

The most recent data available, from before the pandemic, shows that foreign real estate investors tend to prefer the following areas:

1. Florida
2. California
3. Texas
4. Arizona
5. New Jersey
6. New York

This trend is expected to continue, especially in coastal cities, according to CNBC.

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Why Invest In Costa Rica Real Estate?

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By Jimmy V. Reed

Why all the Fuss about Costa Rica Real Estate Investments?

Have you heard all the buzz in the last few years about investing in Costa Rica? If not, you may be missing some of the best opportunities to make money in real estate right NOW!

Why Costa Rica?

Costa Rica affords a stable, growing economy in an outstanding environment. Only a few hours from the U.S., the “secret” of Costa Rica’s allure is becoming common knowledge, which is increasing tourism and development. Property values, once renowned for their incredibly low prices, are now rising with the increased housing demand. In short, the window of opportunity for major profit is right now!

About Costa Rica:

Costa Rica is flanked by the Pacific Ocean and Caribbean Sea. With a distance of approximately 155 miles between coasts, Costa Rica is well known for the premium it places on peace, education and democracy. In 1949 the government abolished the Army, allocating all would be military expenses to education and health care. As a direct result the literacy rate rose to 95% and continues to be one of the highest rates in the Americas. International ports on coasts, air and freight transportation services, and a well developed infrastructure and a strategic location at the crossroads of two continents make Costa Rica a contender in world markets. The government’s receptiveness toward new business ventures and excellent incentive plans have lured a growing number of multinational corporations to the country.

Spectacular natural beauty and peaceful atmosphere attract residents and tourists year after year. Nine active volcanoes, diverse forest environments, hot springs, wetlands, lakes, island reserves and 600 miles of beaches on two coasts account for the dramatic increase of tourism and residency in the last decade. Costa Rica’s varied terrain provides endless possibilities for activities ranging from hiking and white water rafting through national parks to snorkeling, scuba diving, and surfing off of the Pacific and Caribbean shores. Whether your interest is business or pleasure you will find Costa Rica a country of unequalled beauty.

Last year some statistics showed that there were 89,000 ex patriots living in Costa Rica. They find that the price points and cost of living put them way ahead in living standards and allow for the purchase of houses priced way below that of the United States. These properties are in gated communities with ocean, mountain, and rain forest views. This coupled with very favorable tax situations make it the idea place to invest. I see this first-hand as a developer there myself, because we are able to put our investors around the world into projects that will earn them double and triple returns of  those they may find in the States.

Why You Should Invest in Costa Rica:

There are several projects currently in process in Costa Rica and due to the recent US economy; there is an influx of investors now wanting to participate. As Investors, you should always keep in mind that your goal is to make the safest investment possible with the greatest return to you, in the shortest time period. You should analyze the investment, use your intelligence and make a calculated estimate based on the information you have available. That’s Investing 101! Costa Rica is now one of those investments that make a lot of sense for both the novice and seasoned investor.

Investors I know that have been involved in several development projects in Costa Rica from as small as 100 acres to as large as 1,650 acres. All said they needed expertise help when closing on these projects; they needed a team to help them with everything from writing contracts to title companies. Now there are two to three different American companies in Costa Rica that provide title guarantees. Those corporations provide foreigners with a title land guarantee.  Therefore, if there is a problem with fraud or problems in the title, they can be identified and the buyer can be paid back.

We also want to stress a crucial point to overseas investing and that is taking a little trip to the property you intend to buy or invest in. Now many investors we know have invested in Costa Rica and did not visit the properties firsthand. However some have visited since their purchases and found that they really enjoyed going to Costa Rica and seeing first hand where they have invested their money. One of our goals this last year was to inform investors of the opportunities in Costa Rica by encouraging them to take a FAM trip. A FAM trip is known in the travel industry as Familiarization and Marketing: it’s a trip you take to learn about the area and have a vacation at the same time. I would encourage investors who invest in these countries to hook up with a group that can show you the area, understand the investment, and at the same time give you a little cultural immersion while having fun at the same time.

In the future these types of trips will help the investor who never thought they would invest in another market become more comfortable and familiar with the market they have an interest in.  It’s true that with the help of the internet you can gather plenty of information on markets like Costa Rica fairly easy. Fact is for the first few years of International investing I did all my research on different markets via the internet.  But we also know the value of seeing an investment with our own eyes. Some Investors I know finally took a little trip down to Costa Rica to learn more about the projects. At the same time they had a blast riding around the projects on ATV’s and later on boat trips through the rivers and ocean of one of the most beautiful countries they had ever been to. Now that’s Cultural Immersion!

In closing, the returns are looking incredible. The market and demand are there. All you need to do is fill the demand just as many other investors are doing. Keep this in mind; investing should be, and can be fun. If you find yourself not comfortable with the investment then walk away. But don’t be like some investors who find something wrong with every investment and so end up never investing in anything. A true investor analyzes the project for what it is and then with all the facts he has moves forward or backs away. Moving forward though may sometimes require a little Leap of Faith.

 

Jimmy V. Reed         

Jimmy V. Reed of Fort Worth, Texas has been investing in real estate since 1987.  In 1991, he started conducting full-day training sessions on Wholesaling.  He then began teaching and mentoring others throughout the country. He is currently the founder of the Fort Worth R.E. club www.1REclub.com and has his own real estate training company that includes Wholesale, Probate, Mentoring & a Biblically based Debt Free training course and more!

More info available at www.JimmyReed.net

 

Top 5 Reasons Why Real Estate Investors have their Eye on Kumamoto

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By Priti Donnelly

If there is one city in Japan to watch for, it is Kumamoto, the capital city of Kumamoto Prefecture on the Kyushu landmass. Here you will find a property market in which opportunities are rare and sell almost as soon as they hit the market. Most investors familiar with the Japanese property market focus on high yields and affordable prices.  A city such as this, in its growth phase also has the potential for increased land value. Hence, Kumamoto is one of those markets with the potential for the best of both worlds.

Population

Kumamoto has experienced remarkable growth. Notable for one of the largest solar farms in Japan and positioned as a hub with a port for people and import/export of cargo. In this satellite city, population has grown from 670,348 in 2008 to 734,917 in 2015. That’s 9.63%! Compare that to 3.91% growth in Fukuoka, 1.31% in Kobe and 1.13% in Sapporo during the same timeframe. The location continues to draw tourists to its natural hot spring resorts and to the impregnable, defensive designs of the historical Kumamoto Castle dating back to 1467.

Affordable High-Yield Properties

Where there is a surge of population in a developing area, investors can find affordable, high yield properties. It’s first come first serve for the rare availability of one room apartment units (“mansion” in Japan) on the market in Kumamoto. Prices can be as low as 2.4 million to 2.8 million JPY (USD $21K to $25K) at between 7.5% to 9% yield net pre-tax, approximately USD $150 to $240 net income per month.

Secure Returns

Governance in Kumamoto supports subsidized employment and volunteer opportunities as well as rehabilitation and housing services for first offence ex-cons, the destitute and homeless. Therefore, along with great price and high yield, unlike other parts of Japan, the government pays rent directly to the landlord. In fact, some realtors and property manager offices specialize in buying vacant buildings to rent entirely to welfare recipients because of the high and secure returns.

Occupancy

From our experience we have never had a vacancy longer than two months in this city. Part of the reason is that properties are generally within ten minutes walking distance to the nearest train station. By comparison, Sapporo has five to six month vacancies, despite its size, high returns and white collar industries, and similar vacancies in Nagoya, the industrial powerhouse city.

Construction Standards

Investors often ask us about the effect of earthquakes in the area. Again, from our personal experience, on the 14 properties under our management, approximately only USD$500 in damages and that was to one window frame and some flooding under it. Even if there had been more damage, investors would have been protected under insurance.

One of the reasons that Kumamoto does not tend to disappoint is that many of the properties were built after 1981when the building standards act was revised for earthquake resistant construction methods. While 1981 is a turning point for some investors, some older buildings built prior to 1981 can be retrofitted to bring them up to code by renovating, repairing and re-strengthening exterior walls.  In assisting buyers with their due diligence, we look to see if the building has sufficient accumulated funds for repairs to cover the cost for work, or alternatively we look for completed work to justify depleted funds. Either of these cases tells us that the building is well managed, common in Kumamoto.

For these reasons, investors say Kumamoto is one of the best high return locations in Japan. if you see an opportunity don’t ponder over it too long. Properties there don’t come up often enough and when they do they most certainly don’t last.

Priti Donnelly – Manager, Sales and Marketing

Nippon Tradings International (NTI)

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She helps real estate investors, new to the Japan property market understand both the value of the cash flow property market, the challenges, as well as assisting with individual needs in growing cash flow portfolios.

http://www.nippontradings.com

 

Foreign Investors Approach to Real Estate Investing Under $50K

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By Priti Donnelly

Real estate investing does not necessarily have to be in your backyard. In fact, with volatile markets around the world, many investors are expanding their criteria to more diverse international real estate portfolios.  International properties can be much more rewarding, both in affordability and higher yield. To qualify for the under $50K option you must meet the following requirements:  have an open mind to foreign real estate, an interest in cash flow rather than capital appreciation;  and interested in investing under $50k.

The Prospect

Now that you qualify, let’s take a look at properties in the Japan market. Outside of Tokyo you can easily find properties from $30K to $50K. Even more impressive is the yield of 6% to 12% because prices haven’t risen as sharply as they have in other cities. For example, in the center of big cities, or first tier cities such as Fukuoka and Nagoya you can expect a yield of 6% to 8%. In second tier cities such as metropolitan Sapporo, you will find properties with a yield of 9% to 10%. In the third tier are smaller townships, albeit with good profiles, a yield of 10% to 12%, all net pre-tax. With an occupancy rate of 93% to 94% properties are usually occupied bringing your investment property immediate income of $250 to $400 a month on average.

Method

To invest in real estate in Japan, investors work with an agent/proxy acting as an extension of themselves for the property purchase and management. This is mainly because of the language barrier. As agents/proxies ourselves, we communicate on investors’ behalf with the property/rent manager, building management company, tax authorities, and insurance company. Since non-residents cannot open local bank accounts, by having a physical address and telephone number in Japan to manage the portfolio, we are able to pay bills, collect rental income, and transfer/accept overseas funds.  In fact, you actually never need to travel to close the purchase, unless of course, you want to take a leisurely trip to take in the culture, historic traditions and breathtaking scenery.

Tenants

Japan is a landlord’s paradise — high, stable and reliable cash flow, very affordable, and because of Japanese ethics, tenants are polite, docile, trouble free, and honest. Living away from your investment property, you will not need to worry about destruction to your property or evictions.  Of course, the same tenant will not last forever but the average turnover is quite stable at 4.5 years for singles’ units, and higher for larger family sized units, sometime up to 15 years.

Earthquake Concerns

While the recent earthquakes have not deterred investors from properties in Japan, we have had concerns about the effect of earthquakes on properties. Under a standard policy, earthquake, tsunami, volcano and flood damages are covered by insurance policies and insurance is surprisingly inexpensive, only a few dollars a month. Since the building itself carries an accumulated funds pool, any remaining losses not covered by insurance are generally covered by the pool. As part of the due diligence process at the time of the purchase, we check the status of the accumulated funds to determine whether 100% coverage is necessary.

Selling Your Property

Since the market moves very quickly in Japan, properties are listed only a few days before they are sold. Therefore, if you decide to sell your property, there is usually a buyer ready to purchase.  Keep in mind the tax implications. A property owner, whether foreign or local, who sells a Japanese property within five years can expect to pay 40% capital gains tax. After five years, the tax drops to 20%.

Generally, our clients invest in properties for cash flow purposes rather than capital gain. If capital appreciation is what you are looking for then your ideal market would be Australia, U.K., U.S. and even Tokyo and at a considerable price.  But, for steady monthly income, where yield is high, cash flow is immediate and properties are incredibly affordable, the real estate market in Japan could be an option to consider to let your cash flow investment journey begin.

 

Priti Donnelly

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She understands the importance of transparency in today’s international market. Through her insight, she focuses on breaking barriers and helping investors feel confident about their overseas property investments.

Website: http://www.nippontradings.com

How to Purchase and Manage an Investment Property in Japan

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By Priti Donnelly

Real estate investments in Japan continue to attract foreign buyers from around the world for high yield, affordable prices and cash flowing rental income. But, in a foreigner-shy country that speaks mostly Japanese, conducting due diligence, negotiating and making an offer can be almost impossible. To complicate matters further, properties in the Japanese real estate market are sold within days, sometimes hours, making it more difficult to compete against local buyers. So, how then do foreign buyers successfully manage to invest in the market?

Find a Local Proxy/Agent

The first step is to find a local bilingual (Japanese-English) proxy/agent who will help you familiarize yourself with the property market. Look for someone who is available to you, communicates well and who can provide you with information in a timely fashion. Consider your proxy as an extension of yourself. Expect transparency about their services, keeping you informed at all stages of the purchase process and clearly explaining the management process. Don’t hesitate to ask for client references.

Familiarize Yourself with the Market

There is no need to travel to Japan to scout the area, unless you want to. Your experienced and trusted proxy will work with you to familiarize yourself with the market. They should have strong knowledge of locations, in particular, areas with population growth to ensure tenant demand. Ask about properties close to shopping districts, schools and hospitals where tenant demand would be higher. Another factor to consider is the age of buildings. In 1981, the building standards act changed their policies to ensure earthquake resistant construction methods. This is the turning point that some buyers look to when purchasing an apartment, although many older buildings built prior to 1981, have been retrofitted to bring them up to code.  Next, you may have a certain size and features in mind – one room with a living room, kitchen and dining room, close to a train station is ideal for a student, single or elderly person. Two or more rooms could suit a family. Of course, your budget and yield are naturally of significance.

Analyze the Numbers

Once you have a good idea of the features you have in mind, your proxy will send you analyses of properties to suit your criteria and break down the numbers (price, costs, yield, etc.) For example, with the exception of Tokyo, investment properties across Japan range from $40K to $60K at 6% to 12% yield. In the center of big cities, or first tier cities such as Fukuoka and Nagoya you can expect a yield of 6% to 8%. In second tier cities such as metropolitan Sapporo, you will find properties with a yield of 9% to 10%. In the third tier are smaller townships, albeit with good profiles, 10% to 12%, all net pre-tax. With an occupancy rate of 93% to 94% in these areas, you will generate immediate income of $250 to $400 a month, on average.

Submit an Offer

It’s easy to see why properties are sold within hours or days at the most in this market. As soon as you see something you like, notify your proxy to submit an offer on your behalf. It’s a good idea to have your agreements with your proxy signed in advance to save valuable time. Because properties are sold so quickly, you won’t likely have time to perform thorough due diligence on any particular deal before submitting your offer, but you should have enough information on your deal analysis to determine whether or not you want to submit your offer.

Conduct Due Diligence

If your offer is accepted, you will receive due diligence information from the real estate agent. One of the key items to look for is the accumulated fund, also known in some countries as a sinking fund. This fund goes toward a renovation/repair pool. Due diligence should be able to determine if the size of the funds pool is sufficient for building repairs. If lacking in funds, then the building report should show substantial renovations to the building to justify the shortage. If not, an experienced proxy will advise you to forego this deal. If you do submit an offer and then discover that you are not satisfied with the due diligence including tenancy history, building renovations or accumulated funds, you should be able to pull back your offer.

Seal the Deal

Once you are satisfied with the due diligence, your proxy is there to help you with the contract and deposit, required documents, deposit and settlement. On the day of settlement, your proxy will pay the rest of the funds on your behalf and the scrivener will perform the ownership transfer from the seller to your name. Within a month you will receive the equivalent of a Title Deed. Congratulations! You just purchased property in Japan from around the globe.

Manage Your Property

You have successfully invested in Japanese property. Now it needs to be managed. Most foreigners do not have a local bank account, physical address or local phone number and therefore, the two challenges are communication and banking. Do not worry. On your behalf, your experienced proxy communicates with the property/rent manager, building management company, tax authorities, and insurance company. The right proxy can also act as your bank account to pay the bills, receive rental income, and provide you with a monthly balance sheet and remittance/acceptance of any funds from overseas.

Finally, what you may not know is that unlike many other countries, there are currently no laws or regulations in Japan prohibiting the purchase of real estate by foreigners. This allows 100% ownership of deeded, freehold property, registered to a foreign address. Currently Japan is the second largest real estate investment market in the world, only behind the U.S.

Priti Donnelly, Sales and Marketing Manager, Nippon Tradings International

Priti Donnelly – Manager, Sales and Marketing

Nippon Tradings International (NTI)

http://www.nippontradings.com

 

Benefits of Diversified Portfolio Benefits in International Real Estate

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By Matt Malouf

When it comes to investing in real estate, people tend to be vigilant about their investments options. What they seem to ignore is how the profit and growth ratio investing in real estate abroad can provide them with great success.

The world is a global village now and so it makes sense that people have started investing in international real estate. There’s a certain charm to this move but more than charm, this smart move can help strengthen your capital flows. We understand the importance of global investment strategy and it’s time that you too understand what this option can offer to you.

Most people hesitate to invest in international real estate because of geography. Real estate is generally a long-hold investment strategy and it’s the long distance that generally makes people uncomfortable while investing in international real estate. But there are certain benefits for global diversification on a real estate portfolio. Let’s look at a few.

Investment Diversity

Being a secure and hard asset, real estate has always been a preferred investment choice for people all over the world. With many fast-growing international real estate markets, this investment opportunity is too good to miss. Investors can enjoy low interest rates and avail a variety of lending options. And with a professional team to back you up, these investment opportunities can be the perfect addition to your diversified portfolio.

With this new financial step, you can have another stream of income. That’s the best part about this investment. It can generate income and even appreciate in value over time. The exchange rate can help you make a hefty promise every time. If you are investing in countries with a higher currency rate than the USA, your investment portfolio is surely going to enjoy the benefits. The change in interest rate also has a significant impact on making international real estate investments a lucrative financial move. Since each property has an intrinsic value, your investment would never go to waste. This is just one of the properties that set international real estate apart from other investment options such as stocks.

Risk Management

So what makes investing in international real estate such a glorious option? The best part of this move is the diversification of risk. When you put all your eggs in one basket, there’s a higher risk of losing it all at once. By spreading your investment over several international real estate properties, you can significantly reduce the risk. The real estate market is dynamic and always in transition. Even the slightest economic change can have a drastic effect on your investment choices. These effects can either be extremely beneficial for you or leave you at the brink of bankruptcy.

By investing in international real estate, you can easily diversify your portfolio and give it a global edge. Since the international housing market tends to operate differently, a decline in one market can cause a significant increase in the other one. With this contrasting nature of the international real estate market, you are bound to gain great benefits.       

Ancestral Roots

When you are looking for some international real estate investment opportunities, why not try and connect to your roots? For many of our clients, the first option for investment is mostly their ancestral country. Their way of paying tribute to their heritage is by investing in their ancestral country. This way, they can always have a place to go back to when they want to experience the life that their ancestors lived.

For many people, this is a lucrative option because it gives their children a chance to know their heritage. People whose ancestors immigrated to the USA often go for international real estate investments in their home country. This is a great reason for choosing the right international real estate. As long as the real estate market in your home country isn’t in a steady decline and is showing great potential, including it in your investment portfolio would be a good call.     

Recreational Value

Investing in international real estate doesn’t just create new income streams but also provides you with the perfect vacation home. So when you are looking for opportunities to diversify your portfolio, make sure you go for an option that can serve well as a vacation spot. Even though the main reason behind this investment is purely financial, buying the right property can also add a recreational value to your investment.

If you love the great scenery of ice-capped mountains of a vacation spot, you can turn this passion into a great investment opportunity. There are some countries that allow foreigners to own property and you must be prepared to take full advantage of this prospect. Contact MyLifeWorldWide.com and let our professionals help you get a diversified portfolio for international real estate.   

Cultural Diversity

This is a great opportunity to experience other cultures. Become a local at the place and you’d be able to explore the region to your heart’s content. Your overseas property can provide you with new experiences, enabling you to explore some other parts of the world. If you have the desire to experience cultural diversity, your international real estate portfolio can help you with that.

Residency Eligibility

Owning a property in a country can often make you eligible for residency and/or assist you in a naturalization application. With this change of status, many doors in the country also open up for you. You can get access to the country’s banking and financial services industry. You can use this opportunity to divide up your fortune and taking advantage of the profitable banking prospects.

Investment Security

Unfortunately, retirement funds in the USA are subject to some strict laws and many people have already bore the cost of these policies. Your retirement fund can come under the threat of lawsuits and creditors, hence leaving you vulnerable at the later stage of life. For availing the ultimate retirement fun with security, it’s imperative that you invest abroad. Your diversified portfolio of international real estate can’t be subjected to the laws of USA and even the IRA can’t attack them in any way.

Your properties in the USA might be at risk of lawsuits but your international real estate is insulated from this risk. This is one of the best reasons for you to consider investing in international real estate.

Your international real estate investment would never go to waste if you work with a professional. With their expertise in the industry and years of experience, MyLifeWorldWide.com can help you make some sound financial moves. With a diversified international real estate portfolio, you can yield great profits, without the usual risk that other investment options pose.

So make the best of this opportunity and make some sound investments overseas. Contact us at MyLifeWorldWide.com for more information and custom solutions tailored to your unique situation.

Matt Malouf, International Real Estate Consultant

MyLifeWorldWide.com

Clarity.fm/mattmalouf

Understanding Japan’s Counter-Intuitive Real Estate Market

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By Priti Donnelly

You may think real estate investing is solely about property growth as you would find in Australia, U.K. US, Singapore and similar markets. The Japanese property market is not ripe with prospects for increased property value. So, why then is the market saturated with foreign investors?

Creating Opportunities Beyond Capital Growth

The Japanese property market suffered at least 25 years of declining/flat-lining prices. Although capital growth made a quiet entrance from 2012 to 2016, it was too soon to for investors to comfortably speculate growth. Instead, investors found a new opportunity. Because of the decline, properties became quite affordable while rental rates remained stable. The result, steady and higher yields across Japan– the ideal cash flow market from high yield rental income.

To put it in perspective, for as little as USD $30,000 at 7.5% yield net pre-tax investors can earn monthly rental income of approximately $170/month. As an added benefit, in a prime location you might also gain property value, but that is not the focus of property investing in Japan. This market is about common sense investing without the speculative nature.

Overcoming the Language Barrier

This is not your typical internationally friendly business market. On one hand, you will experience the most reliable and honest professionals in Japan, while on the other, foreigner-shy professionals who likely cannot speak English. Furthermore, to invest in Japanese properties you will need a local address, phone number and a local bank account, impossible without communication and cooperation. To get around this barrier, savvy foreign investors use a trusted local Japanese/English speaking proxy or representative to act on their behalf for both communication and access to the required information.

Understanding Old Structures

Some novice investors shy away from the Japanese property market believing with a huff and a puff, structures could be blown down. It is true that structures built before 1981, including smaller steel-frame buildings, and even wooden frame houses, were not built to last and require major renovations and repairs over time. However, a major change to the Building Standards Act for earthquake resistant construction methods for buildings (reinforced concrete blocks) occurred in 1981. This became the turning point that investors often looked to when purchasing property. That being said, there is still a niche market for older properties because of the higher yield. In truth, regardless of age, with due diligence, if the property has proof of regular maintenance, renovations, repairs to the interior and exterior, as well as sufficient funds for ongoing repairs, and is tenanted, an older higher yielding property could prove to be a diamond in the rough.

Accepting Foreign Real Estate

Today, the best real estate opportunities do not have to be in your own back yard. JPMorgan Chase says the Japanese real estate and infrastructure is becoming more attractive particularly with no more than 50% of leveraged funds. Above that, real estate doesn’t become the driver, but the leverage becomes the driver of your return.

Japan provides opportunities for stable, monthly cash flow from rental income with yields from 5% to 11% net pre-tax. Add to that, currency exchange and the yen’s role as a safe-haven currency and it’s easy to see why this is a booming market for foreign investors, contrary to the standard real estate investment approach.

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She focuses on Japanese Real Estate, an alternative to speculative real estate investment —  steady monthly rental income, high yield, and affordable properties – a market worth considering.

 

Priti Donnelly – Manager, Sales and Marketing

Nippon Tradings International (NTI)